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Daily News Korea Securities Dealers Association Korea Gains and Loses Heft in Market Gauges (Joong Ang Ilbo)(05.21.2001) Korea's weighting in Morgan Stanley Capital International's Emerging Markets Free Index has risen to 14.8 percent from 11.5 percent. But its weighting in the MSCI All Country World Index has dropped to 0.46 percent from 0.58 percent MSCI published on Saturday, Geneva time, a provisional index series, in which 17 Korean companies were newly included. The 17 companies were: Korea Telecom Freetel (3.6 percent); preferred shares of Samsung Electronics Co. (1.9 percent); Kia Motors Corp. (1.6 percent); Hyundai Heavy Industries Co. (0.9 percent); Good Morning Securities Co. (0.6 percent); Kookmin Credit Card Co.; S-Oil Corp. (0.5 percent); Humax (0.4 percent); NCSoft (0.3 percent); Hankuk Electric Glass Co. (0.3 percent); LG Engineering & Construction Co. (0.2 percent); Pacific (0.2 percent); Yuhan Corp. (0.2 percent); Nongshim (0.2 percent); Poongsan Corp. (0.2 percent); Asiana Airlines (0.1 percent); and Hanjin Shipping Co.(0.1 percent). Samsung Electronics saw its weighting in Korea climb to 26.4 percent from 23.9 percent, while Pohang Iron & Steel Co.'s weighting went up to 9.7 percent to 7.8 percent. The weighting of Shinhan Bank also rose to 2.8 percent to 2.4 percent. In contrast, Korea Electric Power Corp. suffered a 5.9 percentage point cut in its weighting, and SK Telecom saw a 5.7 percentage point drop. Korea Telecom Corp.'s weighting was also reduced but is expected to be readjusted after its planned issuance of global depository receipts. Nine corporations were dropped from the index: Daesang, Hyundai Engineering & Construction, Isu Chemical, Korea Express, Kukdo Chemical, LG Insurance Co., Namhae Chemical Corp., Samyang and Ssangyong Cement Industrial Co. Korea 54th in Per Capita Income (Chosun Ilbo)(05.21.2001) Korea's per capita Gross National Income as of 1999 stood at US$8,490, 54th in the world, according to "World Development Indicators 2001," a study released by the World Bank recently. According to the study, Korea's GNI was far below Hong Kong ($24,570) and Singapore ($24,150). Luxemburg topped the per capita GNI list with $42,930, five times more than Korea's. Korea, on the other hand, reached US$397.9 billion in terms of nominal gross domestic income, placing it the 13th in the world. The nominal GNI for the United States was the largest with $8.8 trillion, followed by Japan's US$4.75 trillion Korea 1st-Qtr GDP Seen Growing 0.6%, Reversing Drop: BN Survey (Bloomberg)(05.21.2001) South Korea's economy probably returned to growth in the first quarter, after shrinking for the first time in 2 1/2 years, as factories stepped up production and consumers spent more, economists said. Gross domestic product probably grew 0.6 percent from the previous quarter, seasonally adjusted, according to the median forecast of seven economists polled by Bloomberg News, after contracting 0.4 percent in the fourth quarter, The Bank of Korea will report first-quarter GDP tomorrow at 12 p.m., Seoul time. ``I expect the economy made a decent recovery last quarter,'' said Oh Suktae, an economist at Citibank N.A. in Seoul. ``Stronger industrial production and wholesale and retail sales figures are signs that first-quarter growth was positive compared with the previous quarter.'' That is not to say Korea's economic slump is over. Falling overseas demand for the country's computer chips and other electronics will probably cut growth by more than half this year, and companies are still holding back on new investments. From a year earlier, the economy probably grew 3.8 percent last quarter -- the worst performance since the final quarter of 1998, when GDP shrank during the country's worst recession in decades. Economists said growth is expected to slow to 4.2 percent this year, down from last year's 8.8 percent. Worst Over? Finance Minister Jin Nyum said last week the economy probably grew between 3.5 percent and 4 percent last quarter, raising an earlier forecast of as little as 3 percent. There are some signs the economy's worst troubles may be over. Factory production rose all three months in the first quarter, reversing a two-month slide, led by computer makers such as Trigem Computer Inc. and automakers such as Hyundai Motor Co. Retail sales also snapped a decline in March. Consumers and businesses grew less pessimistic last quarter. The index of consumer expectations, which points to spending plans over the next six months, rose to 94.1 points in March from a two-year low of 82.2 in December. Even so, a reading below 100 means more people plan to cut than increase spending. The Federation of Korean Industries' business confidence index topped 100 in March after dipping to 62.7 in January, the lowest in almost three years, as companies said they expected both domestic sales and exports to rebound. Not Just Yet While expectations for the economy may be improving, there is plenty of evidence that a rebound has not happened yet. Industrial production gained 4.9 percent in the first quarter from a year earlier, about one-fifth the 23.6 percent growth recorded in the same period last year. Korea's manufacturers are still leaving more than a quarter of their capacity idle and cutting back on investments. Exports, which made up 45 percent of Korea's GDP last year, grew just 2.4 percent in the first quarter from a year ago, compared with a 29.8 percent surge a year earlier. A 10.1 percent drop in semiconductor exports during the quarter is a sign that demand for electronics -- which helped pull the economy out of the 1998 recession -- is faltering in key markets such as the U.S. and Japan. Factory stockpiles rose 15 percent from a year earlier in March, a sign companies are making more goods than they can sell. Korean companies cut overseas investment by more than half last quarter from the fourth quarter, and the government expects them to scale back spending on factories this year. A government drive to clean up about $50 billion in companies' bad debt is putting an added drag on investment. U.S. Exposure The International Monetary Fund last month cut its forecast for Korea's economic growth to 3.5 percent from an earlier 6.5 percent. ``It's difficult to say whether the economy is settling in for stable growth,'' said Go You Sun, an economist at Meritz Securities Co. in Seoul. ``There are many uncertain factors in and outside Korea, the main concern being the U.S. economy.'' Government officials have said the economy may grow less than 4 percent this year if the U.S. economy slows more sharply than expected. The finance ministry in December initially forecast 2001 growth of as much as 6 percent. The central bank cut its key interest rate a quarter-point to 5percent in February, citing declining industrial production and weaker spending and investment.